CHANDIGARH MANAV VIKAS TRUST vs. CHIEF COMMISSIONER OF INCOME TAX AND ORS

This writ petition under Articles 226 & 227 of the Constitution of India has been preferred claiming the following reliefs: “It is, therefore, humbly prayed that the Writ Petition may kindly be allowed and by an appropriate, order or direction:- (i) the impugned Order dated 26/11/2023 (Annexure 13) passed by Respondent No.1, Chief Commissioner of Income Tax, Jodhpur may be quashed and set-aside. (ii) respondent may be directed to issue Registration Certificate to the Petitioner Trust. (iii) Any other order or direction which this Hon’ble Court deems just and proper may kindly be passed.” (Uploaded on 07/03/2024 at 01:35:24 PM) (Downloaded on 28/10/2026 at 12:01:41 AM)

The petitioner is a Charitable Trust, registered with the Sub- Registrar, Hanumangarh on 28.11.2023 and with Devasthan Department, Bikaner on 22.12.2009. The petitioner is also registered as a Society under Section 12(A) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act of 1961’). Owing to such dual nomenclature of the petitioner i.e. Trust as well as Society, it shall be henceforth referred in the present judgment as ‘the petitioner’ only.

Thereafter the petitioner had filed an application on 28.09.2012 seeking exemption under Section 10 (23C) (vi) of the Act of 1961 in the prescribed Form No. 56D for the year 2011-12 before the Office of Commissioner of Income Tax, Bikaner, Range Bikaner, and the said application was forwarded to the officer of the respondent-Chief Commissioner. Thereafter, due to certain defects/discrepancies in the application, the petitioner filed a fresh application and the same was considered, while also keeping into consideration the aspect of limitation.

Subsequently, during the proceedings, the respondent no.3 issued a communication dated 28.01.2013, the petitioner was asked to furnish certain documents in relation to the application in question, and was further asked information regarding the educational institution. The petitioner submitted a reply to the said communication. Thereafter, the respondents issued a communication and asked the petitioner to appear in person alongwith certain documents, pursuant to which the petitioner has put in his appearance, and furnished the required information. The respondents also issued another communication dated 14.08.2013 (Uploaded on 07/03/2024 at 01:35:24 PM) (Downloaded on 28/10/2026 at 12:01:41 AM)

3 Thereafter, the respondents vide the impugned order dated 26.11.2013 rejected the petitioner’s application for granting the exemption under Section 10 (23C) (vi) of the Act of 1961. 3. Learned counsel for the petitioner submitted that the petitioner is engaged solely in the educational purposes, and therefore, the petitioner falls under Section 10 (23C) (vi) of the Act of 1961.

It was further submitted that the respondents issued various query letters to the petitioner and the petitioner acted upon each and every such letter and provided the requisite information, to the satisfaction of the respondents, to the effect that the petitioner is engaged exclusively in imparting of education and no other purpose is being carried out by the petitioner, and therefore, the impugned order is not justified in law.

It was also submitted that in the impugned order, a finding was recorded regarding the figures of surplus of income over and above the expenditure to infer that the petitioner is being run for the purpose of profits, but even for carrying on an education institution for charity, some surplus is bound to follow for various reasons, and therefore, the impunged action of the respondents in not extending the exemption to the petitioner is arbitrary and illegal, and thus, the impugned order deserves to be quashed and set aside.

In support of such submissions, learned counsel relied upon the following judgments : (Uploaded on 07/03/2024 at 01:35:24 PM) (Downloaded on 28/10/2026 at 12:01:41 AM)

On the other hand, learned counsel appearing on the behalf of the respondents, while opposing the aforesaid submissions made on behalf on the petitioner, submitted that the petitioner does not fall under Section 10 (23C) (vi) of the Act of 1961 for the purposes of exemption, because the surplus being generated is not incidental to educational purposes.

It was further submitted that the petitioner is being run on commercial lines, as it is evident by the expenditure incurred on the advertisement by the petitioner during the financial year 2008-09, amounting to Rs. 41,074/-; an institution, like a coaching center or a private school, which is being run with the (Uploaded on 07/03/2024 at 01:35:24 PM) (Downloaded on 28/10/2026 at 12:01:41 AM)

It was also submitted that for grant of exemption under Section 10 (23C) (vi) of the Act of 1961, it is required that the institution concerned is engaged solely in the education purposes and the word ‘solely’ here means ‘exclusively’, meaning thereby, the sole object of the charitable institution must be pertaining to imparting education, as has been held by the Hon’ble Apex Court No. 56D for the year 2011-12 before the respondents; whereafter, during the proceedings in question, the respondent no.3 issued various communications to the petitioner calling upon it to furnish certain documents in relation to the application in question, which as per the petitioner was duly furnished. Subsequently, the respondents vide the impugned order dated 26.11.2013 rejected the petitioner’s application in question.

This Court further observes that the respondent-Chief Commissioner gave a finding in the impugned order that the petitioner is being run as an institution for the profitable purposes and regularly earning a surplus income out of its activities, and thus, the petitioner’s case does not fall under the exemption (Uploaded on 07/03/2024 at 01:35:24 PM) (Downloaded on 28/10/2026 at 12:01:41 AM)

In the present case, the Assessee is not claiming any benefit Under Section 11(2) as it cannot; because in (Uploaded on 07/03/2024 at 01:35:24 PM) (Downloaded on 28/10/2026 at 12:01:41 AM)

This Court also observes that the Ministry of Finance, Department of Revenue, Central Board of Direct Tax issued a Circular bearing No. 14/2015 (F.No.197/38/2015-ITA-I) dated 17.08.2015, stating therein that representations have been received seeking clarification on certain issues relating to grant of approval and claim of exemption under Section 10 (23C) (vi) of the Act of 1961, and vide the said circular, it was clarified that the mere generation of surplus from year to year cannot be a basis for rejection of application under Section 10(23C) (vi) of the Act of 1961. Relevant portion of the said Circular is reproduced hereunder:- “3. Generation of surplus out of gross receipts (Uploaded on 07/03/2024 at 01:35:24 PM) (Downloaded on 28/10/2026 at 12:01:41 AM)

This Court also observes that the petitioner is claiming that it is being run as a Trust solely for educational purposes, and thus, seeking the exemption under Section 10 (23C) (vi) of the Act of 1961, and the generation of surplus from year to year cannot be bar in seeking such exemption under the said provision of law. This Court further observes that after the judgment rendered by the Hon’ble Apex Court in case of Queen’s Educational Society (Supra) and issuance of the aforementioned clarificatory Circular, the case of the present petitioner needs to be duly considered by the respondents.

Thus, in light of the aforesaid observations and looking into the factual matrix of the present case, particularly, the precedent of Queen’s Educational Society (supra) and the aforementioned clarificatory circular, the present petition is partly allowed; (Uploaded on 07/03/2024 at 01:35:24 PM) (Downloaded on 28/10/2026 at 12:01:41 AM)